Local business groups urge speedy vote count

The Energy Regulatory Commission (ERC) has approved a new rate-setting methodology applied for by the Manila Electric Co. (Meralco) and two other distribution utilities (DUs).

But the performance-based rate making (PBR) application, industry sources said, could result to an increase in Meralco’s rate by 54 centavos per kilowatt-hour.

Meralco president and COO Jesus Francisco, however, said: “We cannot comment on the ERC’s findings as we are still studying them. Further, this is just a draft determination and thus, all figures are tentative.”

The draft determination on the applications of two other DUs — Dagupan Electric Corp. and Cagayan Electric Power and Light Co. — who also filed their own PBR petitions as Meralco did last year, were also released by ERC.

The PBR is an internationally-accepted alternative rate-setting methodology which has been mandated by the ERC for the National Transmission Corp. Transco and all private DUs. This is embodied in the Electric Power Industry Reform Act  (EPIRA) which calls for the establishment and enforcement of “a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency and inefficiency of the regulated entities.”

According to the same provision, the rate-setting methodology adopted and applied must ensure a reasonable price of electricity.

 “With this shift to PBR, consumers can expect more reliable service,” Francisco said.

“While the new methodology allows DUs to undertake various service and system upgrades, it also strictly enforces on them performance standards on reliability and customer service,” he said.

Under the PBR, the revenue requirements of a distribution utility are determined based on the optimized rate base and approved capital and operating expenditures for a forecast four-year period.

Meralco was last allowed to adjust its rates four years ago in June 2003. It still has a pending application at the ERC for a rate adjustment filed last May 2005. 

Comments on the draft determination of Meralco will be entertained by the ERC until June 15 and a public consultation, where consumer groups will have the opportunity to air their opinion and side on the matter, will be held on June 26. 

In the revised timetable released by the ERC, the final determination will be released on Aug. 31 this year. 

“In the final analysis, aside from following the mandate of law, it is still consumer interest that will be ultimately upheld in this shift to a new rate-setting mechanism,” the Meralco official said.